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Ed Miliband announces new union proposals but risks losing 90% of Labour funding

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Ed Miliband gave his much anticipated speech on the relationship between the Labour party and the unions yesterday and as the content, tone and ramifications were being digested across Westminster, it began to look like Labour was headed for a major funding crisis.

The row began with some serious fiddling by the Unite union in the selection process of a candidate to replace Eric Joyce, who stepped down after being convicted of assault in the House of Commons bar. Unite had been apparently recruiting new members for the party (who would then vote on the preferred Unite candidate for the seat) without their knowledge or consent. As the scandal broke, Ed Miliband had no choice but to come up with a major public response as allegations of undue union influence on Labour policy making swirled. Not least because the bizarre appointment of his awkward, unconvincing self ahead of his urbane, professional brother was largely orchestrated by the unions.

Thus, he stepped up yesterday to announce a major change in the funding structure of the party. Currently, union members who pay dues to the union itself have part of their financial contribution automatically passed on to the Labour party. Miliband’s new proposals would make any funding or affiliation of the Labour party an ‘opt in’ process for each union member rather than at the discretion of union leaders. This would in essence make the union link more grassroots and reduce the influence of individual union bosses It may also bankrupt the party. For example, Unite currently affiliates 400,000 of its 600,000 members to the party on a collective basis. How many of those would realistically ‘opt in’ to support the party?

Despite being handed the poisoned chalice of Tony Blair’s full support and finding an unlikely ally in Unite general secretary, Len McCluskey, an icy reality check was swiftly delivered by the GMB general secretary, Paul Kenny. He said he would be lucky if more than 10% of his membership said they wanted to be affiliated to the party individually. As a result, the union's annual donation to the party could fall from about £1.5m a year to less than £200,000. Kenny said "the consequences of this are very far-reaching".

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